WH Smith cuts sale price of high street business by £12m

WH Smith has announced a significant reduction in the sale price of its high street business, which has decreased by £12 million due to deteriorating trading conditions. The deal, finalized on Monday with investment firm Modella Capital, now has a revised gross cash proceeds figure of up to £40 million, down from the previously anticipated £52 million. The adjustment reflects a shift in expectations regarding the future performance of WH Smith's 480 high street stores, which are set to be rebranded under the name TG Jones. The company stated that the original sale agreement was 'no longer deliverable' and cited a combination of a cautious outlook from stakeholders and a recent period of softer trading as key factors influencing the revised valuation. This news prompted a 5% drop in WH Smith's shares during morning trading, highlighting investor concerns about the viability of retail in the current economic climate.

The high street business, which employs approximately 5,000 individuals, is facing challenges amid growing worries about the overall health of UK retail. Recent data from the Office for National Statistics revealed that retail sales volumes had plummeted by 2.7% month-on-month in May, marking the sharpest decline since December 2023. This downturn was primarily driven by a decrease in sales at food retailers. Retail analyst Nick Bubb remarked that Modella Capital's decision to lower the purchase price reflects a cautious approach to acquiring a struggling business. Despite the adjustments, Modella did not withdraw from the deal entirely, indicating an ongoing interest in the high street market, albeit with more prudent expectations. As WH Smith retains its branding for travel-related shops located in railway stations, airports, and hospitals, the transition for the rebranded high street business marks a significant shift in the company's strategy in response to changing market dynamics.